Well, for lack of a better idea, since you find it a drafty little space. I'm assuming the draft comes in on the right? Most of the necessities in the area are located of the left side; i.e. vent, thermostat, light switch etc. What I would do I think is caulk up the drafty spots, maybe even add sized poster board wrapped in batting I covered in a gorgeous fuscia with diagonal grosgrain ribbons every which way covered with a heavy velvet to be attached to the area above & below the window. (Of course remove the drapes that are hanging in there). This for the purpose of using it as a pin-it board for notes. Attach a table height board covered in felt to carry across the full width of the little room. Leaving just enough space for a comfortable little antique desk chair. Paint the back wall a bright cobalt blue, paint the ceiling a silvery pearlescent white. Find a way to attach a clip-on task lamp. And stretch a heavy duty enough wire across the top of the opening and complete it with a heavy doubled velvet drape with a drooping valance. Place a swag with fringe & jewels on it to be closed when not in use. Voila intrigue is yours!

My ex-husband and I had an issue with a large window that looked out over a sidewalk where people were constantly walking by and looking directly into our living room. We solved the problem by using window film that was one-way so we could see out but it was like a mirror if anyone tried to look in. There are other varieties as well. We still got all the sunshine and light but didn't need to worry about whether or not the neighbors could see me watching tv in my nightie on a sick day...It also meant the door to door salesmen couldn't look in and see that I was home when I didn't answer the door. http://www.gilafilms.com/en/privacy-window-film.aspx#.VOuUBS5vksQ

Your suggestions are really greatly appreciated. My town house unit is under complete exterior re-cladding works, prompting quite substantial interior makeover (i.e installtion of ducted air con, replacing wall to wall carpet with timber upstairs, and tiles in open space downstaris, replacing creamy wall paper will be replaced with neutral white paint. So my green kitchen with creamy formica counter (bench) top should go. I don't hate green simply had egounh of it after long 15 yeras! My small U shape kitchen is due for complete makeover, I think! I'll probably go with new cabinets (lower one for microwave) up to the ceiling, when move fridge at the end I'll go with panel with matching colour up to the ceiling, expanding counter top on the other side to the fridge. I guess that removal of the cupboard can be compesated with extension of the counter top so we can fit 3x drawer underneath and cabinets up to the ceiling can provide some useful storage space. Backsplash in same white palette or darker in contrast? Your kind ideas please!

This made me laugh: http://www.theguardian.com/environment/2016/jun/09/seagull-turns-orange-after-falling-into-vat-of-chicken-tikka-masala I couldn't copy the picture, but it's hilarious.